Microsoft’s planned acquisition of video game company Activision Blizzard has hit a fresh obstacle in the United Kingdom, where the country’s antitrust watchdog has expressed concerns that the $68.7 billion all-cash deal would stifle competition and hurt UK gamers.
The Competition and Markets Authority (CMA) conducted an in-depth investigation and found that the deal could increase Microsoft’s dominance in the growing cloud gaming market, which could harm gamers who cannot afford expensive consoles. The watchdog also expressed concerns that the deal could weaken the competition between Microsoft’s Xbox and Sony’s PlayStation, negatively affecting UK gamers.
This blockbuster deal, which would be the largest in the history of the tech industry, is also facing opposition from Sony and regulators in the US and Europe. If the deal goes through, Microsoft would control popular game franchises such as Call of Duty, World of Warcraft, and Candy Crush.
The CMA chair, Martin Coleman, stated that the watchdog’s aim is to ensure that UK gamers are not negatively impacted by global deals that could potentially harm competition and result in higher prices, fewer options, or less innovation. Microsoft’s Deputy General Counsel, Rima Alaily, assured the public that the company is committed to providing effective solutions that address the CMA’s concerns.
Activision CEO Bobby Kotick said in an internal email to employees that the company hopes to continue constructive talks with regulators in the UK and EU and is confident that the law and facts are on their side.
The UK antitrust investigation is set to continue for a few more months, potentially delaying Microsoft’s plans to resolve a lawsuit brought by the US Federal Trade Commission (FTC). The FTC has sought to block the deal, claiming that the merger could violate antitrust laws by suppressing competition to Xbox and its game subscription business.
This is not the first time that the CMA has taken a strong stance on a Big Tech agreement. Last year, the watchdog blocked Facebook’s acquisition of Giphy over competition concerns.
Options to address the CMA’s concerns include blocking the deal, selling off part of Activision’s business, or a behavioral remedy such as making popular games like Call of Duty available on other platforms. The CMA will seek feedback from interested parties for its final report, due on April 26th.